Tobacco output, demand shilling to Third World

- income a factor

Most of the increase in tobacco production projected for the next five years will take place in the developing countries. According to FAO projections to 1985, world tobacco output is expected to increase more rapidly than in the previous decade when reduced growth rates reflected producer adjustments to low prices. The overall expansion in supplies is likely to meet global demand requirements which are expected to continue to rise at about the long-term rate. However, a marked change is indicated in developed countries, where demand is expected to increase at about half the rate of the past decade. In developing countries, however, the growth of demand is expected to accelerate and consumption levels to rise accordingly.

The situation in the world tobacco economy was reversed in the early 1970s. Following several years of surpluses and depressed prices, gradually increasing demand and stagnant production resulted in tight supplies, especially of light cigarette leaf. Stocks in both producing and consuming countries were drawn down and prices increased sharply. The full impact of this situation became evident in the mid-1970s when world tobacco production expanded to more than 5.5 million tons compared with an average level of about 4.5 million tons at the beginning of the decade. Although prices subsequently weakened temporarily the long-term upward trend in demand for tobacco resumed in 1977, indicating favourable earnings prospects to growers, particularly in developing countries.

World tobacco output is now projected to rise to 6.3 million tons (farm sales weight) by 1985, representing an annual growth rate of 2.0 percent, or nearly double the actual yearly increase between 1962-64 and 1972-74. In the developing countries, production growth is projected to increase by 2.8 percent annually compared with 2.1 percent in the previous decade, whereas in developed countries moderate growth, about 1.0 percent annually, would reverse the slight downward trend since the early 1960s.

On this basis, developing countries will be producing by 1985 nearly 4.0 million tons of tobacco annually, or 63 percent of the total world output compared with 52 percent in 1962-64. Rising labour costs in high-income countries and the policies of such countries to maintain leaf prices at remunerative levels will continue to encourage expansion of production in developing countries. Especially rapid growth, exceeding 4 percent annually, is expected in Latin America and Africa, but increases would also be large in the Near East and the Far East. Production is also projected to rise in China, though somewhat less rapidly than during the previous decade, during which the country surpassed the United States as the largest tobacco producer in the world.

Demand is also projected to rise more rapidly in the developing countries than in the industrialized world, at 2.8 percent annually compared with 1.8 percent for the latter. The increase is attributed to rising income levels, and increased availability of tobacco products in countries where production expansion programmes have been launched. Even so, per caput consumption in the developing world at the projected figure of 0.84 kg annually would still be well below the 1.17 kg per caput average of the rich world.